Run on banks feared as concern rises over government seizing deposits to fund war

AI summary

<p dir="ltr">This is a domestic financial stability story for Russia rather than one with a direct read-through for Western asset prices, but it carries meaningful signal value for anyone tracking the sustainability of Moscow's war financing. A sustained deposit exodus of this scale tightens the funding base available to Russian banks just as they are already carrying a heavy load of state-directed lending to defence industries, raising the risk of a domestic liquidity squeeze that could eventually force more aggressive intervention, whether through deposit restrictions, capital controls, or the kind of confiscatory measures Russians are already anticipating. For traders positioning around sanctions and secondary market risk, the dismissal of a senior state economist for publicly doubting Russia's ability to sustain the war adds to a growing list of signals, alongside widening budget deficits and collapsing bond issuance, that domestic financial strain is becoming harder for the Kremlin to manage quietly.</p><p dir="ltr"> Russians have pulled around 24.4 billion euros from the banking system so far this year on fears the Kremlin could seize deposits to fund the war, a warning a top state economist made just before he was dismissed.</p><p dir="ltr">Summary:</p><ul dir="ltr"><li>Russians withdrew around 24.4 billion euros from the country's banking system in the first seven months of the year, according to <a href="https://www.euronews.com/2026/08/19/russians-pull-billions-from